Reuters, CNBC, Bloomberg, CBS News, and the Financial Times contributed to this report.
Marvell Technology is making a massive bet that the AI boom is here to stay. On Monday, the custom chipmaker announced it’s buying optical components maker Lumentum in a $115 billion all-stock deal, including debt. It’s one of the biggest tech tie-ups of 2026 and a direct challenge to larger rival Broadcom.
The price tag works out to $1,132 per Lumentum share – a 23.9% premium over its last close before deal talks leaked. Lumentum shareholders will get 4.5 Marvell shares for each share they own, giving them roughly 33% of the combined company. The equity value alone is about $102.5 billion. The deal is expected to close in the first half of 2028, assuming regulators and shareholders play along.
Why optical? Marvell CEO Matt Murphy didn’t hold back.
“AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation,” he said in a statement.
He told CNBC the combined company will create “a new category of company” that combines electrical and optical tech to meet exploding demand for faster, more energy-efficient connections in AI data centers. Lumentum makes lasers, photonic products, and optical components used in cloud computing and communications networks. Marvell brings custom chips and networking expertise.
Wall Street wasn’t thrilled. Marvell shares fell 6% Monday. Lumentum dropped 11%. Both stocks had already slid since talks were first reported last month, as investors worry about the sustainability of AI spending and tightening margins.
“This is an enormous bet, and investors are right to ask whether Marvell is paying too much and taking on too much at once,” said Axel Rudolph, chief technical analyst at IG Group.
He acknowledged the strategic logic: combining Marvell’s chips with Lumentum’s optics could give it “a much stronger hand” as data centers demand faster connections. But the market is in a skeptical mood.
The deal also puts Marvell squarely in Broadcom’s lane. Broadcom has long been Google’s main custom-chip partner and offers a broad menu of AI data center hardware. Marvell notched a big win in August, signing a deal to supply chips alongside Google’s AI processors worth up to $120 billion through fiscal 2033. At its investor day in October, Marvell forecast fiscal 2031 sales of $70 billion to $90 billion, with about $37.5 billion coming from interconnect – a market it expects to grow 65% a year to $65 billion by 2030.
Nvidia, which invested $2 billion each in Marvell and Lumentum earlier this year, is watching closely. Murphy shot down concerns about circular dealmaking.
“This is a double down on supporting Nvidia, who is the ecosystem leader in this area,” he told CNBC. “We’re very committed to that partnership.”
Nvidia didn’t comment on the deal.
There are protections built in. If Marvell’s board drops support or walks away to accept a rival takeover offer, it owes Lumentum $5.8 billion. Lumentum would owe Marvell $2.9 billion in similar circumstances. And Marvell would pay $3.2 billion if regulators block the deal. Lumentum also pre-announced strong second-quarter revenue guidance of $1.58 billion to $1.63 billion, well above the $1.48 billion analysts expected.
Marvell’s market value has more than tripled over the past three years to over $170 billion, thanks to its role helping Amazon and other tech giants build custom AI chips. It closed a $3.5 billion purchase of Celestial AI in February. The Lumentum deal is its largest since buying Inphi for $10 billion in 2021. Murphy is betting that optical connectivity is the next big bottleneck – and that Marvell should own it.
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